I. Statement on Accounting Treatment of Bad Debt Write-off
If the bank provides conclusive evidence of bad debts and meets the prescribed conditions after examination, it shall report them at any time, examine and approve them at any time, and write them off from the bad debt reserve in time. Banks shall not conceal non-reporting, long-term losses and cover up non-performing assets. Write-off of bad debts must follow the principles of strict identification conditions, providing conclusive evidence, serious accountability, reporting step by step, examination and approval, confidentiality to the outside world, and having accounts to check.
Banks must provide the following materials to declare and write off bad debts:
1. Information about the borrower or the invested enterprise, including the bad debt write-off declaration form (filled in by the bank) and the approval materials, the detailed materials about the occurrence of creditor's rights and equity, the borrower (cardholder), guarantor and guarantee method, the basic situation and current situation of the invested enterprise, and the liquidation of property, etc.
2. The investigation report of the handling bank (company), including the causes of bad debts, the remedial measures taken and their effects, the specific recovery process and proof of the borrower (cardholder) and guarantor, the reasons for the disposal and write-off of the collateral, the relevant documents of the creditor's rights and equity managers, the heads of departments and units and the responsible persons;
3. Other relevant materials.
Bad debts that cannot be proved by conclusive evidence shall not be written off.
Two. Examination and approval of accounting treatment for bad debt write-off
The audit points of bad debt write-off mainly include whether the reasons for bad debt write-off are in compliance; Whether the bank's creditor's rights are fully paid off; Whether the amount of bad debts is accurate; Whether the person responsible for the loan has been identified and investigated.
Bank bad debts are reported step by step, and the head office of the bank (the head office) approves the write-off. For small bad debts, tier-one branches (branches) can authorize examination and approval, and report to the head office (head office) for the record. The specific authorization amount of the head office (head office) to tier-one branches (branches) shall be determined according to the internal management level and reported to the competent financial authority for the record. A tier-one branch shall not authorize the branch.
When banks write off bad debts, they must strictly perform the examination and approval procedures and fill in the declaration form for write-off of bad debts. The superior bank (company) shall, after receiving the declaration form of the subordinate bank (company), organize relevant departments to conduct strict examination and sign opinions. Except for the provisions of laws and regulations and the Administrative Measures for Bad Debt Write-off, no other institution or individual, including the debtor, may interfere in or participate in the write-off of bad debts in banks; At the same time, the following creditor's rights or equity rights shall not be written off as bad debts:
1. The borrower or guarantor has economic repayment ability, and the bank fails to perform all possible measures and implement necessary procedures to recover the creditor's rights in accordance with the provisions of these Measures;
2, in violation of laws and regulations, in various forms to escape or suspend bank claims;
3. The bank's creditor's rights escape or are suspended due to administrative intervention;
4. Creditor's rights that the Bank has not recovered from the borrower and guarantor;
5. Other bank claims or equity that should not be written off.
Legal basis: Administrative Measures for Write-off of Bad Debts of Financial Enterprises
Article 1 These Measures are formulated in accordance with relevant laws and regulations and the financial system of financial enterprises in order to standardize the management of write-off of bad debts of financial enterprises, enhance the risk prevention and control ability of financial enterprises and promote the healthy development of financial enterprises.
Article 2 These Measures shall apply to financial enterprises established in People's Republic of China (PRC) according to law, including policy banks, China Development Bank, commercial banks, insurance companies, financial asset management companies, securities companies, trust companies, financial companies, financial leasing companies, rural financial institutions and other financial enterprises (collectively referred to as financial enterprises).
Small loan companies, financing guarantee companies and other enterprises engaged in financial business shall be implemented with reference to these measures.
Article 3 The term "bad debts" as mentioned in these Measures refers to the creditor's rights and equity assets that financial enterprises bear risks and losses and meet the conditions identified in these Measures. The term "write-off" as mentioned in these Measures refers to the accounting treatment method in which financial enterprises write off confirmed bad debts, write off accrued assets impairment reserves or directly adjust profits and losses, and write down assets off the balance sheet.